Any anecdotes of a company that was successfully split up as you suggest?
I just think middle management is a recipe for disaster. Their perceived high status means they aren't easily criticized or managed for rational output in a way normal workers are managed.
For some, middle management is a mere bus stop on the way to the top. So they play it hard. Elbow tactics. Other knows they end in middle management and forever try to sustain artificial kingdoms by any means necessary.
It is too distant from common workers and it's not the top either. It's the one place in the organization where the most vile and unproductive behavior goes unchecked.
Isn't this the ironic part of the post? The "middle managers" empowered the common workers who were ostensibly in the best position to identify and solve the problem. Yet those common workers seem to interpret their role as just messengers and not wholly owning the situation by also offering alternative solutions. It's not even clear to me that they identified the root problem so that it wouldn't happen elsewhere *
* yes, they said it was performing work that wasn't spec'd. But why were they doing it? Bad requirements management? Bad contract management? Something else?
But this reminded me of a podcast episode with some PE guys. The PE was able to enhance an acquisition by issuing ESOPs to all employees and educating the employees about the structure and value of the ESOPs - Inverse of firing folks.